Forecasting Profitable Models For The Internet Of Things

Leon Hounshell is a serial technology entrepreneur, and is currently the CTO of IoT company Greenwave Systems.

There is movement afoot in the internet of things (IoT) space, and it’s going to change everything.

This year, CES was laser focused on applications, highlighting intelligent voice interfaces in the vein of Amazon’s Echo/Alexa. We heard less about IoT and more about intelligent and connected products. This doesn’t mean that the IoT is done, it simply indicates that a broad category is getting even broader. More interestingly, the devices in the internet of things are getting smarter.

While pretty much every IoT use case thus far has employed the cloud to do the heavy lifting as far as compute-intensive analytics and machine learning capabilities are concerned, that paradigm has started to shift. Tiny artificial intelligence engines can now be incorporated into devices at the edge of networks (gateways, routers, sensors and even chips), which allows companies to push computational loads out to the physical point of interaction with the IoT service — thus enabling truly real-time applications.

The company where I serve as CTO is working on our own IoT platform, and develops these sorts of engines along with other IoT technologies. It’s clear to us that edge analytics deploying predictive patterns that can intelligently anticipate events in real time (positive or negative) can bring tremendous value to our customers and partners. Even behemoths like IBM and Cisco are engaged in advancing this “edge” of IoT. IBM has recognized that without real-time analytics, 90% of the data captured at the edge is lost in terms of using it for fault detection.

Using The IoT For Industry

The investment world is currently coming to grips with the power and potential impact of this new kind of fog computing, with advanced analytics functionality shifting from the cloud to edge devices. Before making a significant impact on direct consumer plays, I see this change first reverberating through the enterprise.

As such, I think this is the year that the industrial internet of things (IIoT) will finally get the credit it deserves. While the steadily consolidating consumer space for IoT applications has received the lion’s share of attention in the past, IIoT has already figured out money-making business models where new real-time edge compute abilities naturally extend. Businesses not typically associated with automation or technological innovation are starting to acknowledge the wealth of opportunity these models represent for their verticals, with the industrial space serving as a bellwether for the groundwork it has laid.

As enterprise communications analyst Dave Michels recently noted, “Enterprises spend a considerable amount of time and cost forecasting and guessing. The more data a business can collect about its operation, the more intelligent decisions it can make.” IoT deployments are key to collecting the data that provides that insight, and IIoT models have further shown how to translate such insight into automatable action, as exemplified in the oil and gas industry where such systems reduce capital expenditure through predictive maintenance or in commercial aviation where maintenance directly equates to fuel savings.

The current shift to discovering insights at the edge expands those possibilities. Enterprises can wrest real value out of this technology and realize measurable ROI in functions as diverse as customer experience management, predictive maintenance, automated supply chain administration, and self-optimized production.

That doesn’t mean IoT won’t be making big consumer inroads in the near term; it just means they’ll come in a different package than we are used to seeing. For example, telecom giants and ISPs are finally discovering IoT service strategies for consumers that have traction. Consumer-based IoT (particularly in the home) has struggled for 20 years to find a compelling value proposition and sustainable business model, but with large service networks entering the fray, we will finally start to see some interesting offerings led by the carriers.

And even though it seems over-hyped, natural language voice interaction will increasingly play a larger role IoT. As the technology improves for understanding conversational language and intent, I imagine we'll see use cases become easier for the mass consumer market to understand and implement. We will quickly move beyond having a speaker that can tell us jokes to myriad voice solutions driving a smart, connected experience in both personal and professional settings.

Thinking About Security

But before we reach critical mass in any of these connected technologies, the pressing deficiencies in IoT security must be thoroughly addressed. This need grows all the more urgent as IoT solutions are increasingly leveraged in sensitive medicine, lifestyle and transportation applications. After the disruptive IoT-related cyberattacks of 2016, security is now an issue that will make or break the fortunes of IoT ventures. Those actively working to protect their stakeholders and customers will be rewarded, while severe punishment awaits the indifferent. In fact, the entire internet could be punished if the IoT industry as a whole doesn't improve security and continues to allow the deployment of vulnerable devices. The importance of better implemented and more pervasive collective IoT security (in both device and service designs) cannot be overstated.

In spite of critical security challenges, IoT growth shows no signs of slowing. Investments are continuing to be made in stretching connectivity and innovators keep advancing what our machines can do for us. The result, according to a new update in IDC’s Worldwide Semiannual Internet of Things Spending Guide, is that global IoT spending will likely reach $1.28 trillion by 2020, experiencing compound annual growth of 15.6%.

Now that’s a healthy forecast.

Serial Technology Entrepreneur, currently the CTO of Greenwave Systems.